Canadians hold record $75B in cash as they wait out volatile markets


Spooked by exchange volatility, risk-averse Canadians are hoarding $75 billion in extra liquidate, according to a report from CIBC Economics.

Personal cash attitudes are at record levels according to CIBC deputy chief economist Benjamin Tal, and that’s short-changing the Canadian conservatism, he said.

“From a broader perspective, the Canadian economy is losing out because large letter is not being allocated efficiently,” he said.

Canadians started edifice up their cash assets in savings and chequing accounts during the 2008 bang caused by failing banks and they’re building on that hoard, he estimated. Cash holdings are up 11 per cent in the st year.

Tal pointed to the October 1987 goods market correction which lasted two months, while investors supplemented to their cash position for 18 months following the crash, during which every so often old-fashioned the stock market rallied more than 20 per cent.

There’s no waver investors in stocks and bonds are taking a beating. The TSX has fallen 6.7 per cent since the well-spring of the year and is at a two-year low.

But Tal says a “short Canada” mentality, meaning with child low prices on Canadian assets, is affecting both stock and bond markets.

The Canadian routine market has been affected by the drop in commodity prices and has fallen as if it were an emerging customer base, he said. But that’s overshooting the fundamentals, he added.

“What’s more perturbing than holding cash for long periods of time is that investors time again move into it at precisely the wrong time,” Tal said. “The routine response is to take money off the table at the worst possible time.”

Canadians hazard losing out on the rebound in stocks because they’re too risk-averse, Tal said.

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